MPF mulls opening to annuity plan

Business | Joyce Chen 9 Feb 2018

Employees could hopefully use money in their MPF accounts to purchase insurance after the public annuity plan is launched by the government in the second half this year, the Mandatory Provident Fund Schemes Authority said yesterday.

However, as the public annuity plan is still in its early stages, the authority will need further discussions with the Hong Kong Mortgage Corp, which is wholly owned by the government through the Exchange Fund, MPFA executive director Cheng Yan-chee said.

Meanwhile, the online platform eMPF will be launched by August, and he expects this digitalization could help reduce the charges of related funds.

MPFA is looking to lower the fund expense ratio to less than 1 percent, though the ratio already fell to 1.56 percent last year, said Cheng, who is confident there is still room for such reduction.

Fund expense ratio is a ratio that measures the expenses of an MPF fund as a percentage of fund size.

The authority launched its Fund Performance Platform yesterday, which allows citizens to catch up with most updated MPF information such as annual return ratio and fund expense ratio.

Looking back to 2017, MPFA chairman David Wong Yau-kar said the MPF recorded 22.3 net return, excluding all charges and expenses, which was the highest gain in the past 10 years.

Total assets of its members grew to HK$843.5 billion last year, up HK$197.2 billion from the previous year, and the largest growth ever.

It has an average annual yield of 4.8 percent, surpassing the 1.8 percent inflation rate, thanks to the booming stock market, Wong said.

According to internal data, MPF members prefer equity investment, which accounts for 69 percent of total MPF assets. Returns from stocks were 34.4 percent in 2017, compared to the average yied in the past 17 years of 5.5 percent.

Yesterday, after several fluctuations, the Hang Seng Index gained 128.07 points, or 0.42 percent, to 30,451.27, ending five days of declines, with some blue chips climbing more than 1 percent.

Tencent Holdings (0700) rose 1.3 percent to HK$420.20, while Hong Kong Exchanges and Clearing (0388) increased 1.19 percent to HK$271, and AIA Group (1299) 1.89 percent to HK$61.95.

Meanwhile, the mainland financial sector did not share the cheer, as the Industrial and Commercial Bank of China (1398) fell 0.88 percent to HK$6.72, and Bank of China (3988) slipped 0.47 percent to HK$4.28.

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